A Melbourne phone book publisher that created a fake debt collection company to coerce payments from its advertising clients has been fined $40,000 by the Heidelberg Magistrates' Court.
Local Blue Pages - also known as Bluey's Pages - publishes a phone book that is delivered to homes in the Melbourne metropolitan area and contains advertisements from small businesses.
Consumer Affairs Victoria Director, Simon Cohen, and Victorian Small Business Commissioner, Judy O'Connell, said the recent outcome against the company and its sole director, Les Papaioannou, should serve as a warning to those looking to exploit small businesses for a profit.
Consumer Affairs Victoria began investigating Local Blue Pages in response to complaints referred by the Victorian Civil and Administrative Tribunal (VCAT) and the Victorian Small Business Commissioner.
The investigation established that Local Blue Pages harassed four advertisers between 2014 and 2016 using a range of illegal and coercive debt collection tactics, including:
- Creating a fictitious debt collection agency called SPT Collections to make phone calls and send correspondence, leading victims to believe they were dealing with an independent debt collector.
- Misrepresenting and overstating the consequences of failing to pay debts claimed by the company.
- Serving people with completed VCAT applications which had not been lodged with the tribunal, creating an impression Local Blue Pages had commenced formal legal action.
- Demanding payment of debts for which the victims were not liable.
The tacts were knowingly authorised or permitted by Mr Papaioannou.
Mr Papaioannou and Local Blue Pages each pled guilty to four charges of undue coercion under section 168 of the Australian Consumer Law (Victoria).
In addition to the company's $40,000 fine, the court imposed a $5,000 fine on Mr Papaioannou at a joint hearing on May 16.
Those harassed for payment by Local Blue Pages included a massage therapist who received debt collection notices and calls despite making repeated attempts to cancel his contract, and a plumber aggressively pursued despite the company's failure to publish his ad.
Correspondence sent to victims - whose contracts were worth between $1,500 and $3,500 - employed a range of scare tactics, including claiming legal action could affect their credit rating and lead to enforcement action by the Sherriff's office.
"Local Blue Pages repeatedly and aggressively pursued small business owners using tactics intended to intimidate them into paying debts they did not necessarily owe," Mr Cohen said.
"The threats made by Local Blue Pages undoubtedly caused a great level of stress to victims. The substantial fine imposed by the Court sends a strong message that these coercive practices have no place in Victoria."
Ms O'Connell urged business owners to thoroughly research advertising opportunities before spending their hard earned dollars.
"Always ensure you check the legitimacy and track record of a publication before paying any money or agreeing to anything," she said.
"A quick internet search for reviews could save you a lot of time, stress and money in the long run."
"You should also make sure you keep written records of authorisations for advertising or directory entries so that if you receive an invoice, debt collection notice or a telephone call, you can go back to your records to check it."